ICO clamps down on marketing masquerading as market research

On 6 July 2016, the ICO issued a stop order against Change and Save Ltd, a Bolton-based company that tried to dodge direct marketing rules by disguising marketing as market research.

Change and Save Ltd called people who were registered on the Telephone Preference Service (the “TPS“) to ask when they had made or last updated their will. They went on to promote will-writing, funeral and legal services.

Between 1 June 2014 and 31 December 2015, 254 people complained about the calls; 216 to the TPS and 38 direct to the ICO. The number of complaints resulted in an investigation by the ICO.

During the investigation, Change and Save Ltd insisted that the calls were market research, not marketing. Accordingly, they argued, they were not subject to the rules on direct marketing.

The ICO disagreed. It concluded that the real purpose of the calls was not to carry out genuine market research at all, but to promote and sell services. Change and Save Ltd were, therefore, in breach of direct marketing rules by calling people who were registered on the TPS without first obtaining their opt-in consent.

Change and Save Ltd will face prosecution if it does not comply with the stop order. Even if it does comply with the stop order, there is no doubt that the company has already suffered significant reputational damage… arguably the worst form of punishment for breaching direct marketing rules.

Why this matters:

The practice of passing off nuisance calls as legitimate research (otherwise known as “sugging”), is not uncommon.

Sometimes, it can be a very fine line between genuine market research and marketing. However, in its updated direct marketing guidance (available here), the ICO is very clear. It explains that an organisation will be breaching the Data Protection Act 1998 (the “DPA“) and potentially the Privacy and Electronic Communications Regulations 2003 (the “PECR“), if the real purpose of a “survey” is to sell goods or services, generate leads or collect data for marketing purposes.

Indeed, Steve Eckersley, the ICO’s Head of Enforcement, takes no prisoners when announcing the stop order. He says:

“Firms trying to avoid direct marketing rules will be quickly found out – people spot a nuisance call when they get one. We know this because people complain to us. Trying to disguise a nuisance call as a survey or market research simply will not wash.”

This stop order is just one in a long list of examples of the ICO’s tough approach to unlawful direct marketing, which is clearly demonstrated in recent enforcement action, its updates to the direct marketing guidance, and, significantly, in its response to the consultation and review of the e-Privacy Directive (implemented in the UK by the PECR).

In that response, the ICO advocates a harmonised opt-in approach to all direct marketing channels. It says that “the privacy implications of receiving unwanted telemarketing calls are at least as great – and arguably greater, particularly for some vulnerable people – than other channels which already require an opt-in”.

The possibility of having to obtain opt-in consent for all live marketing calls (irrespective of whether someone is registered with the TPS) has been mooted for a while, and was laid bare in the Queen’s Speech outline of the Digital Economy Bill back in May (summarised here).

Against a backdrop of significant enforcement (including this recent action against Change and Save Ltd), the prospect of (yet another) change to the current regulatory regime is looking more and more likely.